Flexible Spending Account (FSA)

Unlocking the Benefits of Flexible Spending Accounts (FSAs): A Comprehensive Guide

Flexible Spending Accounts (FSAs) offer individuals tax advantages while covering medical and dependent care expenses. Dive into the intricacies of FSAs, exploring how they work, their advantages and disadvantages, special considerations, and frequently asked questions.

Understanding Flexible Spending Accounts (FSAs)

FSAs serve as tax-advantaged savings accounts allowing employees to contribute pre-tax earnings towards qualified medical and dependent care expenses. Discover the nuances of medical and dependent care FSAs, including contribution limits and IRS guidelines.

Exploring How FSAs Work

Learn how FSAs operate, including the tax benefits of pre-tax contributions, contribution limits, employer contributions, and eligible expenses. Understand the implications of recent legislative changes, such as the American Rescue Plan and IRS guidance during the COVID-19 pandemic.

Advantages and Disadvantages of FSAs

Explore the benefits and drawbacks of FSAs, including their flexibility in covering medical expenses, limitations on eligible expenses, and considerations for unused funds at the end of the plan year.

Special Considerations for FSAs

Delve into special considerations for FSAs, including grace periods, rollover options, and IRS allowances for plan amendments during extraordinary circumstances like the COVID-19 pandemic. Learn about limited-purpose FSAs and their compatibility with Health Savings Accounts (HSAs).

Flexible Spending Account FAQs

Get answers to common questions about FSAs, including contribution considerations and using funds for dependents enrolled in different health insurance plans.